A recent research done by CAPS Center for Strategic Supply Research found that purchased services averaged 39% of total purchasing spending. However, about 69% of the supply chain management professionals surveyed indicated that purchasing services is more difficult than purchasing goods according to Industry Week.

It's clear that there are a number of barriers preventing supply chain improvement projects to succeed. Industry Week has provided a number of them in a recent article. They include:

Lack of resources focused on services - The CAPS survey mentioned above found that the average buyer of direct material is responsible for 36 active suppliers. The average buyer of direct services is responsible for about 105 active suppliers. These buyers are responsible for approximately the same level of total spending. The dilution of the services buyers' time makes it difficult for the buyers to be proactive with their suppliers.

Lack of Information Technology support - Services buyers are less likely to be supported by technology and information systems, and often have to use software provided by the service suppliers for making services purchases and tracking services spending and supplier performance.

Understanding of cost drivers and structures - There is limited understanding of the cost drivers and underlying cost structures of the services supplied. Part of the problem with this lack of understanding is that it can create misaligned incentives, as the buyer might think that the supplier wants higher volume when the supplier really desires more certainty in its volume.

Growing supply base - In the CAPS study, 58% reported an increase in the number of offshore services suppliers, while only 4% reported a decrease. The supply base is growing larger, and the suppliers now are more difficult to manage with differing cultural nuances.

In my point of view, existence of these issues represents a great opportunity for potential cost savings than does the purchase of materials and components. So it might be an emerging market as the competition is getting tougher in traditional procurement.